Are Buyers In trouble? New Laws Start Aug.17th 2024

The NAR now prohibits brokers listing homes on affiliated databases from offering compensation to buyer’s agents. 

The Impact on Sellers:

Home sellers may refrain from covering buyer-agent commissions, leading to significant cost reductions. The proposed rule change allows buyer’s agents to view compensation offers from their brokerage publicly. This will encourage agents to favor listings with upfront compensation offers, pressuring sellers to still offer buyer commissions.

The Impact on Buyers:

In the previous system, buyers had little say in negotiations, with sellers covering each agent’s 3% fee. Now, buyers will negotiate directly with agents, specifying services in required brokerage agreements. The buyers commission cannot be financed, buyers must find an affordable agent and agree on compensation terms upfront. This added expense could strain buyers with limited finances, complicating their home search even more.

Housing Market Trends – Start of Q3

New listings, Inventory Continues to Grow as Existing Home Sales Fall.

U.S. existing-home sales fell for the second month in a row, sliding 1.9% month-over month and 1.9% year-over-year, according to the National Association of REALTORS® (NAR), with sales down in all four regions of the country. Higher borrowing costs and accelerating home prices continue to weigh on demand, pushing some prospective buyers to the sidelines and causing market activity to slump ahead of summer.

New Listings were up in the Charlotte region by 17.8% to 5,452. Pending Sales decreased 0.5% to 4,072. Inventory grew 37.2% to 7,439.

Prices moved higher as Median Sales Price was up 3.9% to $400,000. Months Supply of Homes for Sale was up 46.7% to 2.2., indicating that supply increased relative to demand.

Home prices have continued to climb nationwide, despite an uptick in inventory this year. Nationally, the median existing-home price reached $407,600 as of last measure, a 5.7% increase from the same period last year and a record high for the month, according to NAR. Meanwhile, total inventory heading into May stood at 1.21 million units, a 9% increase month-over-month and a 16.3% increase year-over-year, for a 3.5 month’s supply at the current sales pace.

Instant Reaction: Mortgage Rates – July 14th, 2024

The 30-year fixed mortgage rate from Freddie Mac continued with small incremental declines to 6.87% over the last week from 6.95%. At 6.87%, with 20% down, a mortgage payment on the median-priced existing home of $400,000 is $2,101. Last year, the median downpayment for a first-time buyer was 8%; with these metrics, the typical monthly payment would be $2,416.

Positive: The CPI has eased somewhat, but the Fed still has a long way to go before cutting interest rates. However, the Fed has left the door open for one rate cut in 2024, which could assist housing affordability.

Negative: For today’s housing consumers, limited inventory remains even though there is slightly more inventory than last year. If rates come down, more buyers will inevitably join the home-buying market, which could result in bidding wars. Timing a market based only on interest rates may not yield fruitful results…continue reading